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Stocks Drop Into the Close; Facebook Spikes to New High; Homebuilders Rise

Dan Berman

Hot Stock Minute•September 24, 2013

After spending much of the day with modest gains, stocks turned negative and closed near the lows of the day. Investors turned attention to economic data amid uncertainties about the future of the Fed's plan to taper its asset purchases. Among the reports released today, the Case-Shiller home price index for July climbed 0.6% for the month in the 20 metropolitan areas monitored. Prices are up 12.4% year over year, the steepest climb since February 2006. Meanwhile, the Conference Board says its consumer confidence index declined in September to 79.7 from a revised 81.8 in August. Estimates had been for a reading of 79.9.

There's more and more to like about Facebook (FB). The stock climbed over 2% and hit a record intraday high of $49.66 a share. The spike came on an upgrade from Citigroup. Analyst Mark May raised his rating on the stock to buy from neutral and set a new price target of $55 versus the previous of $32. May says Facebook's latest earnings were a turning point for the company. He also sees advertising growth as something which is sustainable.

Blackberry (BBRY) fell 3% as traders digested news announced yesterday about the fallen phone-maker. The company says it has agreed to be taken private by its largest shareholder, Fairfax Financial Holding, for about $9 a share. However, the deal is far from sealed. The stock had originally notched a gain of 1% yesterday as word of the proposal spread. But at that point the proposal appeared to be in a more advanced stage.

Homebuilders Lennar (LEN) and KB Home (KBH) both rose on the release of their quarterly reports. Lennar rose more than 4% after easily surpassing estimates posting earnings of 54-cents a share when analysts expected 45-cents. Sales were also higher than the consensus at $1.6-billion versus $1.56-billion. The numbers represent a 14% increase in new orders, and a 46% increase in revenue when compared to the same period a year earlier.

As for KB, it also shattered bottom-line estimates but came in short on the top line. Shares also rose 4%. Earnings were 30-cents a share when estimates were for 21-cents a share. Revenues grew 29% to $549-million but expectations had been for $570-million. In KB's case, the average selling price per home has increased 22% in the past year to more than $299,000.

Cruise operator Carnival (CCL) sank over 7% on its earnings. Adjusted earnings per share beat estimates by 8-cents coming in at $1.38. Still, that figure was down 30% from a year ago. Revenue also beat estimates at $4.73-billion versus $4.65-billion and was up from last year's figure of $4.68-billion. The stock's move lower stems from a warning about the current quarter. The company is forecasting a profit 3-cents a share at best. Carnival is trying to put recent disasters and mishaps at sea behind them. The company also has a new CEO steering all operations.

Carmax (KMX) climbed 3.5% on an earnings beat of 62-cents a share, a nickel better than expected. Revenue also topped estimates at $3.25-billion versus $3.16-billion. The company says it moved 21% more vehicles in the last quarter than it did a year ago. Much of that was due to a loosening of credit. Even prior to this report, shares of Carmax were already up an impressive 33% year-to-date.

Applied Materials (AMAT) rose 9% after announcing this morning that it's merging with Tokyo Electron to create a new $29-billion company. The new entity will have a dual listing here on the NASDAQ and the Tokyo exchange. Prior to the announcement, Applied Materials was already up 41% over the past year.